Investment Opportunities in Kenya
Three Investment Opportunities in Kenya
Kenya is the business hub of East Africa. It is led by an energetic president with a deputy to match. President Kenyatta has his eyes trained on foreign investors to supercharge the Kenyan economy. China was the destination of his first foreign trip since his popular election in March 2013. One of the mega investement deals with the Chinese is the construction of a standard gauge railway line from the Coast to serve what has been termed the Northern Corridor which includes South Sudan, Uganda, Burundi and Rwanda. That hunt for investment was followed closely by President Goodluck Jonathan’s visit. The Nigerian president, in his first ever visit to Kenya was accompanied by 50 of Nigeria’s most monied men. Among these men was Africa’s richest, Aliko Dangote. Mr. Dangote wants to spend billions on another cement company in Kenya. Another cement company? That got me thinking. Investors could do with some advice on what Kenya really needs to keep the economy on the run and the citizens happy. Here is my opinion on some areas that need urgent investment.
1. A mega hospital
Someone like Aliko Dangote with billions to spend can give the people of East Africa a mega hospital. This hospital will have a Cancer, heart and renal units with the most up to date high-tech equipment. Currently, the only government hospital with similar equpment is Kenyatta National hospital. This hospital serves an entire country of over 30 million souls besides the wider East African region. For the few who can afford treatment in private hospitals, there is the MP Shah, the Aghakhan and the Nairobi Hospital. For dialysis, there is also the Parklands Kidney Centre. These private hospitals charge such high fees that it is cheaper for a family to raise funds and take their patient to India or South Africa.
The investor will get a return on investement by tapping on this ‘medical tourism’ potential. While Kenyans will get surgery, chemotherapy and dialysis at home, patients from Africa and other countries will come here for treatment. Another options is to give Kenyas more dialysis machines!
Some facts about dialysis
There are over 300 kidney patients in Kenya, on the queue as they wait for their turn for dialysis at the Kenyatta National Hospital. The oldest kidney patient in Kenya has waited for a transplant for 23 years.The entire group of patients has to share only six functional machines at the Natonal hospital. A record fourteen have broken down! A group of Kidney patients have actually sued the government for laxity in providing adequate machines for them.
The investor could also consider the following:
- Set up a theatre for Kidney transplants only.
- Set up a shop to repair dialysis machines and other hightech hospital equipment.
- Assist patients with the identification of kidney donors abroad
Dialysis machines cost about 13 milion shillings ($ 150,000). If the government cannot equip all the County hospitals, then philanthropic investors should step in and use their business acumen to make the investment pay.
2. Urban Commuter Bus Service
There are four major cities in Kenya – Nairobi, Mombasa, Kisumu and Eldoret. Nairobi is he only City with an organised commuter system, with the other towns relying on the informal Matatu system that is averse to obeying traffic rules. These mass transit vehicles are augmented by motorbikes and bicycles known as border-border. Matatus and border-borders overload and disregard traffic regulations with impunity.
After the adoption of motorbikes by Kenyans as a mode of public transport, every hospital in Kenya has set aside a special ward for motorcycle accidents to cater to the increased accident victims. Clearly investment in better modes of public transit systems is needed.
The seemingly orgainsed bus service in Nairobi, alternatively called a Shuttle Service does not meet international standards. For one, none of the bus management services has a time-table. Several franchises known as SACCOS run the buses in a system that has little control over the driver and conductor. It would appear that the main reason that the informal matatus organise themselves into SACCOS is to give the false impression that they are formal business entities. This phony formalization gives them a business name and a corporate colour scheme. It does not change their bad ways such as overlapping in traffic, driving on pavements, playing deafening music or disrespecting passengers. When they encounter traffic jams they raise fares in the next trip. They also raise fares when it rains because demand for transport increases. Many of these buses were designed for inter-city transport. They have high staircases due to the luggage space under the seats. Embarking and disembarking is tedious especially for the elderly and physically challenged. Besides, few have elegant body design.
To give them some credit, two bus services can score a 6 and 5 on a scale of one to ten. They are Double M and Kenya Bus Service (KBS) respectively. At least they stick to a tariff they have set and issue receipts as well. Their bus designs attempt to follow a standard design and they are good to look at. Most of the other services have unsightly buses, usually emblazoned with rude graphics. They charge unpredictable non standardized fees, on the spur of the moment, often taking passengers by surprise.
Investors, give us formal commuter services that follow a time table!
- Except for Double M and most KBS service buses most operators play loud eardrum – bursting music. Many have a sticker that says “if the music is too loud you are too old.” Often the music is explicit.
- Besides changing routes unexpectedly, they sometimes stop short of their destination and refund less than is enough to complete the journey.
- Without exception, they drive on pavements, overlap traffic and sometimes drive on the wrong side of the road.
An investor in the transport sector will ensure that these objectiives are adressed and that internationally acceptable etiquette is maintained.
Towards the end of 2013, a bus was smashed by a train at Mutindwa in Umoja after the driver ignored orders by a traffic policeman to stop for the approaching train. Eleven passengers needlessly lost their lives! The bus company, known for unruly drivers and conductors is back on the road to continue with the bad habits.
Blame it on the roads!
Disadvantages of Nairobi commuter Bus Services
Except for Double M, the buses are ‘any which’ shape, length and height.
None of the buses, even the most organised Double M services operates with a time table.
Except for Double, which occasionaly succumbs to this vice, all operators change routes at will
For the franchises, the only commoness they can boast of are the corporate colours, and these sometimes differ in minute details, especially in the selection of fonts.
Each bus waits until it is full before departure, even if it takes half an hour to do so.
Operators change route when when there is a jam; when traffic police have a major operation; when passengers are few on a particular route.
Luch of a time table is the major cause of congestion in the numerous termini around the city and the single major cause of traffic snarl-ups during rush hours.
3. Milk and Milk products
Milk in Kenya is way too expensive. Currently it is few shillings more expensive than petrol. When you consider that petrol is imported from the Arabian peninsular before it is refined and brought inland, it does not make sense for petrol to be cheaper than milk what with all the cows in every rural homestead. The explanation is simple – eneficient production. People are blaming the price on the 16% VAT that was slapped on most products but even at 90 shillings a little (about $1) it was still too expensive. Consider that according to the world bank, about 40% of the population lived below the poverty line in 2005.
The few large scale investors in Milk and Milk products do not have large herds. They rely on supplies from small ineficient producers with a few cows to augment their produce, or to deliver to the numerous Cooperatives around the country.
Whenever there is a glut, especially after rains, this small milk producers deliver to overwhelmed cooperatives who paly them less for the product. The industry is forced to slash the prices by half because it had no plans for the surplus. We have even seen pictures on Television where farmers were pouring their milk on the ground because they did not know what to do with the surplus. This was after all their farm animals had had their fill with milk!
A serious investor will rely in his or her own battery of cows, milked by machines and fed optimally to mainintain a predetermined target. Unsold milk will be converted and packed into powders, cheeses and yoghurts. Investors, come to our rescue. If during glutes the farmers still recoup their investments by selling milk at 40 shillings a litre (about half a dollar), surely this can be the price all the time.
4. You heard me - Sanitary Pads. According to credible research, many girls in rural areas miss school five days every month because they cannot afford sanitary pads at the current prices. Without pads, they are forced to use rags, foam or old blanket pieces. These are not materials that are conducive to learning and using them makes the experience burdensome and ashaming. Naturally the girls and their parents choose a stay home period until the natural occurrence is over. Five days a month will work out to 15 days in a school term or 45 days a year! It is no wonder that girls in rural schools perform poorly when compared with girls in city schools.
The chepest brands of sanitary pads cost about Ksh. 50 for a pack of seven with other brands costing more than twice that - Ksh. 135 for a dozen. This may sound like very little money (about $2) but it should be remembered that many poor people in Kenya live on a dollar or less a day! Many families have more than one girl and sometimes two other female dependants. If you were to choose between food and sanitary pads what would you choose?
An investor can rake in Millions of shillings or dollars and still alleviate this irksome problem. Our young girls need to be in school every day to compete fairly in this world. So investors, kindly come and manufacture sanitary pads locally or look for a cheap source and flood the market. They should cost about Ksh. 20 for a dozen! At such a price, every family can afford them and droves of philanthropists will be able to donate them where they are most needed.
Compare Nairobi's efforts with Cape Town
Investment Opportunities are Numerous
Mark and Spencer of UK and Range Rover have set up shop in Nairobi. There is room for investment in every sector, even the seemingly saturated. If you can bring efficiency and better pricing, this market is big.
Visit this page often for more updates on investment opportunities in Kenya.
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